Brent v Dubai

It was a paradigm shift in the Brent/Dubai crude market as the orderly downtrend in Brent/Dubai gave way to a mighty rally on 26 August following Brent’s rally on the Libyan supply disruption news. The Sep’24 Brent/Dubai widened from $0.30/bbl to highs of $0.90/bbl. Nonetheless, the complex is entering September pricing on a strong note, with the Sep/Oct Brent/Dubai box suppressed below -$0.30/bbl. In contrast, outright prices in the deferred have returned to previous highs above $1/bbl.

The strength emerged from a pitiful Dubai complex riddled with selling flow on the back of bearish macroeconomic data and the sell-off within wider risk assets

Brent/Dubai has seen a remarkable fortnight, with the soon-to-be-Bal Aug Brent/Dubai rallying above $1/bbl on 26 July. However, we now see cracks in this rally, with the contract softening to $0.80/bbl on 30 July.

A fortnight of two halves in Brent/Dubai, encapsulating the market’s duality in the year-to-date. The first week was relatively rangebound as prices hovered around -10c/bbl, with volumes low due to the US holiday. As Brent and WTI rallied, Dubai did not follow up as aggressively. This resulted in a massive rally where Aug jumped from -10c/bbl to +40c/bbl in a week, with the banks and funds being the buy-side aggressors.

It seems like the flipping of the calendar month has brought with it a debilitation of Dubai’s strength. The prompt contract has returned to what would be arguably ‘normal’ positives, considering the makeup of the barrel.

It seems like the flipping of the calendar month has brought with it a debilitation of Dubai’s strength. The prompt contract has returned to what would be arguably ‘normal’ positives, considering the makeup of the barrel.

Following a period of extraordinary weakness in crude, with Brent and Dubai both falling over $6.50/bbl between May 29 and Jun 03, there has been no shortage of interesting price action.

Dubai Bling – Two weeks ago, the prompt Brent/Dubai appeared to be hitting a bottom at -14c/bbl with players anticipating a recovery upwards in the near term.

MurbanMania – Overall bearish price action in Brent/Dubai has been unsurprising and the rolldown is generally expected.

The May Brent/Dubai recorded a feeble fortnight amid prices coming off from a high of $1.10/bbl on Apr 12 to sub-zero territory less than a week later with the move downwards exacerbated by players stopping out of length.

The past fortnight forced the May Brent/Dubai out of its range, with price action plummeting from +15c/bbl on Mar 25 to a low of -40c/bbl on Apr 02.

And just like that the OPEC meeting came and went. Jan slipped to a low of -40c/bbl on Nov 30 following the meeting as Dubai bulls half-heartedly sold into the immediate aftermath, letting prices peak below the lower Bollinger Band. Then as we collectively turned our pages on our calendars (us who still use paper) the Dubai bulls lost control and prices began to rally.